News July 2014

Although Volkswagen will sell more than 3.5 million cars in China in 2014, it will be forced to tighten its belt in other parts of the world market. According to the daily newspaper Frankfurter Allgemeine, the VW brand has to come up with savings of about 5 billion euros by 2017. For context, the VW brand generates sales of 100 billion euros and corporate group sales amount to 200 billion euros. VW Chief Executive Officer Martin Winterkorn was unusually frank in criticizing weaknesses within his company and announced an extensive program to improve efficiency. He also said that VW has to focus more on its core competencies and discontinue the production of components which can be manufactured more profitably by suppliers. Things are quite different in the Middle Kingdom where the party never ends. The SUV market is also gaining strength in China, especially for Mercedes, Lexus, Citroen, Kia, BMW, Mini and Porsche.Porsche is also well positioned for growth (more than 10 percent). By 2015, China will be Porsche’s largest single market.The same is true of BMW which is also poised for growth: According to the German financial newspaper Handelsblatt, production will increase from 300,000 to 400,000 vehicles and to six models in the two plants in Dadong and Tiexi over the next two years. This means that the BMW and Mini brands will account for 20 percent of total sales in the Middle Kingdom. In contrast, General Motors is investing millions in Europe to develop efficient engines at their headquarters in Rüsselsheim, Germany. The company intends to boost Opel’s market share to 8 percent by 2022 displacing Ford as the second largest car manufacturer in Europe.